The perpetually self aggrandizing Riad Salameh , ... in the ECONOMIST, here"...The banks' conservative approach to lending makes it difficult for small and medium enterprises to obtain credit. Their heavy lending to the government, which accounted for 54% of all bank lending in January, leaves limited room for the private sector. The banks are not short of funds to lend, but the cost of borrowing is prohibitive for many firms. The considerable political risk premium on government debt pushes up interest rates for everyone: average lending rates stood at 10% in January.
Mr Salameh acknowledged that "when the government runs its business poorly, it is to the advantage of banks", and that there is a need for more resources to be devoted to private-sector and capital-investment projects. If the fiscal deficit is reduced, he said, banks will put more money into these much-needed areas. However, even after the election, fiscal reform will remain politically difficult, not least because many politicians have vested interests in maintaining a large public sector..."
1 comment:
This is absolute crap. Mr. Salameh, in line with Hariri's thinking and that of Wall Street (big success there!) would want us to believe that Government is "big" in Lebanon because of the debt. Not only it is absolutely disingenuous for him to say that but it is his own mismanagement of the debt that has led to the present level of debt, notwithstanding, the various governments (Hariri and Siniora) who have undertaken an unprecedented foolish spree of borrowing short term to finance long term projects whose maturity exceed by far the maturity of the debt incurred. Furthermore, Mr. Salameh fails to say that out of the $50 billion or so in debt, the principal is around $6billion, the rest being "interest" earned by holders of gov. notes, all members of the banking system and cronies of the late PM. We never heard Mr. Salameh cautioning about excessive indebtedness (maybe under the influence of Cheyney's "deficits do not matter"). Anyway, it is high time to start puncturing the Salameh bubble for he is dangerously misleading the government, the media, and the people.
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